Ranbaxy pleads guilty in US, to pay USD 500 million in settlement

Washington: Pleading guilty to "felony charges" relating to manufacture and distribution of certain adulterated drugs made at two India units, the US subsidiary of Ranbaxy on Monday agreed to pay USD 500 million -- the largest settlement by a generic medicine maker till date.

The US Justice Department said in a statement: "In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA, a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories, pleaded guilty on Monday to felony charges relating to manufacture and distribution of certain adulterated drugs made at two of Ranbaxy's manufacturing facilities in India."

"Ranbaxy also agreed to pay a criminal fine and forfeiture totalling USD 150 million and to settle civil claims under the False Claims Act and related State laws for USD 350 million."

Ranbaxy USA pleaded guilty to three felony counts under Federal Food Durg and Cosmetics Act (FDCA), and four felony counts of knowingly making materially false statements to the Food and Drug Administration (FDA).

The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas in India. "Under the plea agreement, the company will pay a criminal fine of USD 130 million, and forfeit an additional USD 20 million," the Justice Department said.

As part of the case's resolution, the whistle-blower, a former Ranbaxy executive Dinesh Thakur will receive about USD 48.6 million from the Federal share of the settlement amount.

"While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance," Ranbaxy Laboratories CEO & Managing Director Arun Sawhney said.

Ranbaxy USA also acknowledged that drug samples waiting to be tested were stored for unknown periods of time in a refrigerator, which did not meet specified temperature and humidity ranges for an approved stability chamber, and that this was not disclosed to the FDA.

Under the civil settlement, Ranbaxy has agreed to pay an additional USD 350 million to resolve allegations that it caused false claims to be submitted to government health care programmes between April 1, 2003 and September 16, 2010, for certain drugs manufactured at the Paonta Sahib and Dewas facilities.

Ranbaxy USA admitted to introducing into inter-state commerce certain batches of adulterated drugs that were produced at Paonta Sahib in 2005 and 2006, including Sotret, gabapentin, and ciprofloxacin.

Sotret is Ranbaxy's branded drug used to treat severe recalcitrant nodular acne, gabapentin is a drug used to treat epilepsy and nerve pain and ciprofloxacin is a broad-spectrum antibiotic.

"When companies sell adulterated drugs, they undermine the integrity of the FDA's approval process and may cause patients to take drugs that are substandard, ineffective, or unsafe," Acting Assistant Attorney General for the Civil Division of the Department of Justice Stuart F Delery said.

Ranbaxy USA also admitted to making false, fictitious, and fraudulent statements to the FDA in Annual Reports filed in 2006 and 2007 regarding the dates of stability tests conducted on certain batches of Cefaclor, Cefadroxil, Amoxicillin, and Amoxicillin and Clavulanate Potassium, which were manufactured at the Dewas facility, the Justice Department said.

A Ranbaxy statement said that On December 20, 2011, it signed a consent decree with the US FDA, under which Ranbaxy committed to further strengthening procedures and policies and at that time its intention to make a financial provision of USD 500 million related to expected costs associated with resolving the DOJ investigation. (Agencies)